Australia's RBA Hikes Rates Again Amid West Asia Conflict, Inflation Risks Mount

• Reserve Bank of Australia (RBA) raised its benchmark interest rate by 25 basis points to 4.1%, marking the second consecutive monthly hike.
• The finely balanced decision (5-4 vote) reverses two of last year's three rate cuts, reaching a 10-month high.
• West Asia conflict is flagged as a key risk, potentially driving oil prices above $100 a barrel and exacerbating global inflation.
• Domestic inflation remains above RBA's 2-3% target, coupled with a tight labor market and strong economic growth.
• Policy outlook is uncertain due to mounting inflation risks and geopolitical tensions, despite cautious market reaction.